Renting out part of your home on a regular basis
You need to work out the portion of your expenses that relate to the floor-area being used solely by the renter (user) and a reasonable floor-area of the common areas used.
You also need to work out the number of days part of your home was rented because you can only claim expenses for the days in a year when that part of your home was rented. When a room in your home is not being rented out, it is treated as being used privately as part of your home.
For example, if you rent a room in your 2 bedroom unit and the renter has access to all of the common property you would calculate the floor area as:
- Rented room (claim 100% for days rented)
(Rented room's floor-area ÷ Total floor-area of the unit) × (Number of days rented ÷ Total days in the year) × 100 = Percentage of deductible expenses
- Common areas (claim 50% for days rented):
(Total common areas ÷ Total size of house or unit) × (Number of days rented ÷ Total days in the year) × 50% × 100 = Percentage of deductible expenses
Example: Renting out part of your home
Jane has a 2 bedroom unit with 2 bathrooms in a popular downtown area. Jane lives alone and only uses her spare room as an occasional home office, for storage and when she has guests. She mainly uses the ensuite bathroom. The second bathroom is accessible from the main areas and is mostly used by visitors.
Jane decides to rent out the spare room using an online platform to earn extra income.
The unit is 80 square metres in total. The spare room being rented is 10 square metres.
Jane also gives paying guests access to common areas including the second bathroom, kitchen, living area and balcony, which totals 50 square metres. She also offers her guests access to her wi-fi for free.
For the period guests are staying and have access to common areas (along with Jane), Jane can claim 50% of the deductible portion of associated costs related to the common areas.
Jane had the room occupied 150 days in the year.
Jane calculates what she can claim based on the following questions:
- How big is the room? 10 square metres.
- How big is the unit? 80 square metres.
- How big are the common areas? 50 square metres.
- How many days is the room rented out? 150 days.
She works out she can claim 17.97% of her general expenses after adding the two calculations together:
- room occupancy − (10 ÷ 80) × (150 ÷ 365) × 100 = 5.13%
- common areas − ((50÷80) × (150 ÷ 365)× 50%) × 100 = 12.84%.
Jane can claim a deduction of 17.97% of her general expenses such as electricity, interest on her mortgage, rates and body corporate fees.
She can also claim 100% of the expenses associated solely with renting out the room, such as the platform's service fees or commission.
End of exampleRenting out your whole home on an occasional basis
If you rent out your whole home (main residence) on an occasional basis through the sharing economy, you can claim the portion of expenses relating to the period it was rented out.
This applies if you rent out your home when you're away for a period of time, or if you vacate it to allow paying guests to stay. In this case, the total expenses you can claim must reflect the portion of the income year your home was rented out.
Example: Renting out your home on an occasional basis
John and Mary live in a one bedroom unit in the city, which they list as available for rent on an online platform for paying guests. When they accept a booking for their unit, they stay with Mary’s parents.
Because the unit is John and Mary’s home (main residence), and they only vacate the place when there's a booking, they can only claim expenses based on the time that it was rented out.
Last year, John and Mary rented out the unit for 100 nights. This means they can claim 27.93% (calculated as (100 ÷ 365) × 100) of the general expenses for the unit (such as electricity, interest on their mortgage, rates and body corporate fees).
John and Mary can claim 100% of the expenses associated solely to renting out the unit, such as the sharing platform's service fees or commission.
End of example